((Translation automated by Reuters, please refer to the disclaimer
(Update with closing prices, added data on dividend ETFs)
by Samrhitha A, Aishwarya Venugopal and Chuck Mikolajczak
The market value of Meta Platforms rose by $196 billion on Friday, representing the biggest one-day increase for a company in Wall Street history, after the Facebook parent company declared its first dividend and posted strong results.
Meta’s shares
META.O
soared 20.3% during the session, also marking its biggest one-day percentage gain in a year and its third biggest gain since its debut on Wall Street in 2012. Its market value now stands at over $1.22 trillion.
Just days before Facebook’s 20th anniversary, Meta authorized an additional $50 billion share buyback on Thursday evening and indicated that its quarterly dividend would be 50 cents per share.
While dividends are associated with mature and slow-growing companies, Meta’s dividend is the fourth offered by the most valuable technology heavyweights on Wall Street, including Apple
AAPL.O
, Microsoft
MSFT.O
, and Nvidia
NVDA.O.
“Paying a dividend suggests that the company wants to improve its image and be taken more seriously. But ultimately, the amount paid is only a symbolic gesture,” said Dan Coatsworth, an investment analyst at AJ Bell.
Meta’s market cap increase on Friday surpassed the previous record held by Amazon
AMZN.O
, which saw its market value soar by $190 billion on February 4, 2022 following an exceptional quarterly report. The day before, Meta had lost more than $200 billion in value, the largest loss in the history of the American stock market, after issuing gloomy forecasts.
Meta’s dividend plan means a significant payment for CEO Mark Zuckerberg, who owns about 350 million Class A and Class B Meta shares. The Facebook co-founder could receive about $1.5 million per year. The Facebook co-founder could receive about 175 million dollars per quarter.
Optimism about the potential of artificial intelligence contributed to a 24% rise in the S&P 500
.SPX
last year, with Meta, Nvidia, Microsoft, and Broadcom
AVGO.O
recently reaching highs. With Friday’s gain, Meta is now up 35% in 2024.
The world’s largest social media company reported strong ad sales and a rebound in user growth when it released its fourth-quarter results, which saw its revenue increase by 25%. Its revenue forecasts for the current quarter also exceeded analyst estimates.
The revenue increase, combined with an 8% decrease in costs and expenses after the elimination of more than 21,000 jobs since the end of 2022, allowed Meta to triple its net profit, which stands at $14.02 billion.
“The efficiency year” has paid off, with a decrease in staff and costs, and Meta has exceeded our expectations for advertising revenue for the year 2023,” said Jasmine Enberg, senior analyst at Insider Intelligence.
While Meta’s dividend is low compared to many companies, it could make its stock more attractive to a larger number of investors, including exchange-traded funds focused on stocks that pay dividends.
Meta’s dividend yield is about 0.4% after Friday’s stock increase. In comparison, Apple’s dividend yield is about 0.5%, Microsoft’s is 0.7%, and Nvidia’s is less than 0.1%, according to LSEG.
“This may start to attract investors who are really looking for dividends and more regular income,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Exchange Traded Funds (ETFs) focused on US companies that pay dividends have assets of over $400 billion, accounting for just over 5% of the entire universe of national ETFs, according to Morningstar Direct data.
Meta has spent billions of dollars over the past decade to increase its computing power for generative AI products that it adds to Facebook, Instagram, and WhatsApp, as well as hardware devices such as its Ray-Ban smart glasses.
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